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Paying Employers and Employees PRSI for sole director

  • 15-11-2012 5:04pm
    #1
    Registered Users, Registered Users 2 Posts: 41


    Hi,

    I basically have just registered my own Limited Company and am the sole employee. I am contracting through an agency who will bill the Company I am currently working for and then pay me. I am obviously liable for all taxes etc. My question is am I liable for both Employers PRSI and Employee's PRSI for myself?
    Seems unfair if I had to but cannot seem to get a clear answer anywhere.

    Thanks


Comments

  • Registered Users, Registered Users 2 Posts: 6,724 ✭✭✭kennyb3


    paulod123 wrote: »
    Hi,

    I basically have just registered my own Limited Company and am the sole employee. I am contracting through an agency who will bill the Company I am currently working for and then pay me. I am obviously liable for all taxes etc. My question is am I liable for both Employers PRSI and Employee's PRSI for myself?
    Seems unfair if I had to but cannot seem to get a clear answer anywhere.

    Thanks

    Your a proprietary director (own more than 15% of share capital) - therefore are on class S and no employers prsi applies.


  • Registered Users, Registered Users 2 Posts: 2,004 ✭✭✭Citizenpain


    [The agency will pay your Limited company - Is that correct?
    Your Ltd Company operates payroll to yourself
    Assuming you are a proprietary Director the company does not pay employer’s PRSI

    Have you an accountant?


  • Registered Users, Registered Users 2 Posts: 2,004 ✭✭✭Citizenpain


    ..


  • Registered Users, Registered Users 2 Posts: 41 paulod123


    Thanks for the replies.
    Yes, the agency will pay the company directly.
    I have an account but he told me there is some ambiguity in this and it was still up in the air. I believe there is a legal case in the UK ongoing and that that may set a precedence.
    That' s good to hear that if you are the proprietary Director you do not have to pay employer's PRSI.


  • Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    UK tax law makes no difference here (unless doing cross border stuff). Contractors in the UK have their own problems (IR13).

    Your problem is you are using an umbrella company, the taxman is threatening to disallow proprietary director status for these.

    Best thing to do is get rid of the umbrella company, it only costs you money and leaves the threat hanging over your head. Forming a company yourself and administering it with the help of an accountant is actually cheaper and less hassle than using an umbrella.

    Do not listen to advice from the umbrella company, they are not impartial. They will tell you anything to get you to stay with them. The only situation where an umbrella company is suitable is for casual contracting - ie people that are only gonna do it for 3 months or whatever. The reason for this is the umbrella mitigates the hassle in starting up and closing down a company. If you are gonna keep contracting for the long term then you want your own company.


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  • Registered Users, Registered Users 2 Posts: 41 paulod123


    Hi srsly78,

    Thanks for the reply.
    No, I am not going through an Umbrella company.
    I have setup my own company and have hired an accountant.
    Like you said, I did not see the benefit going through an Umbrella Company.


  • Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    Well then it's pretty clear, as the first reply stated you pay class S0 prsi. There is no grey area.

    The confusion only comes when people use umbrella companies.


  • Registered Users, Registered Users 2 Posts: 41 paulod123


    I assume then that you would then be classified as Class s under the PRSI contributions.
    Do you know if it's possible to make extra PRSI contributions to have the same entitlements as Class A. Just if the business fails ?


  • Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    Not possible to make extra contributions as a director. (sole traders can make extra voluntary contributions for pension purposes I believe, but this is not relevant to you)

    If the business fails and you cease trading you can then apply for means tested welfare, the same situation a normal worker would be in when their contributions run out. The business would have to be wound up properly before they will means test you.

    if you are worried about unemployment then being a director may not be for you.


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